EUR/USD forces its way through 1.3777

Technical Analysis

EUR/USD forces its way through 1.3777

“The inflation was definitely a little bit of a miss and in line with the theory that [the Eurozone] is still struggling with deflationary pressure.”

- Faros Trading (based on MarketWatch)

• Pair’s Outlook

  Despite the near-term technical indicators opposing a rally, the Euro is gaining ground after it found support in the face of the 55 and 100-day SMAs. Now the currency pair is challenging the weekly pivot point at 1.3777 and, judging by the weekly and monthly studies, is going to continue advancing further. Thus, the mid-term target is a rising resistance line at 1.3951/25.

• Traders’ Sentiment

  Though the bearish views are still popular in the market, the share of short positions is constantly diminishing. Compared to the situation observed five days ago, the percentage of the bears dropped from 66% down to 63%. Meanwhile, there is no significant gap between the numbers of buy and sell orders.

GBP/USD preserves upward impetus

“The risk remains that it [GBP/USD] will decline back towards $1.55-1.60 as the market starts to anticipate the Fed raising interest rates at the same time as the BoE rather than well after.”

- UBS (based on Reuters)

• Pair’s Outlook

  Although the Cable has already reached the up-trend it had previously broken, the pair still does not seem to be willing to decline or at least undergo a bearish correction after an uninterrupted rally started on Mar 23. Right now the Sterling is supported by the monthly PP at 1.6635 and the weekly PP together with the 55-day SMA at 1.6590, and most of the indicators on the longer-term time-frames suggest the appreciation is going to persist.

• Traders’ Sentiment

  As the price of the Sterling is increasing, so does the percentage of the short positions. At the moment of writing they took up as much as 63% of the market, leaving the bulls in a minority with 37%. In the meantime, 61% of orders are to sell the Pound against the buck.

USD/JPY extends rally

“The dollar is looking softer across the board. Yellen signaled that, while the Fed will continue tapering, they are not in a hurry to raise rates, and that was seen by the market as dovish.”

- Barclays (based on Bloomberg)

• Pair’s Outlook

  USD/JPY develops its success—it has already breached the 100-day SMA and is presently probing the resistance at 103.53/34, which mainly consists of the weekly R1 and 23.6% Fibonacci retracement level. Once this supply area gives in, it will pave the way towards the 2013 highs at 104. If after encountering this obstacle the pair retains an upward momentum, it could challenge this year’s high at 105.43.

• Traders’ Sentiment

  The distribution between the long (75%) and short (25%) positions stays perfectly unchanged, even though USD/JPY is not stationary and continues moving north. Concerning the orders placed on the pair, the difference between the amounts of buy and sell ones is minimal.

USD/CHF steps back

“The remarks appeared to be an effort to reverse some of the impression left by her [Janet Yellen] "six months" reference at the March FOMC press conference.”

- BNP Paribas (based on CNBC)

• Pair’s Outlook

  Being intimidated by the tough resistance near 0.89, USD/CHF took a U-turn and plummeted through the weekly PP at 0.8851. If the sell-off carries on, the pair may retreat back to 0.8813/01, where it is likely to find strong backing in the form of the monthly PP and weekly S1. However, while in the short-run there could be a rebound, on the weekly and monthly charts the U.S. Dollar appears to be soft.

• Traders’ Sentiment

  The bullish sentiment with respect to USD/CHF has been weakening lately. And even though the distribution is still heavily skewed in favour of the long positions, less and less SWFX market participants are convinced that the U.S. Dollar will appreciate.